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New GST Comes to Rescue: Eating Out Becomes Affordable!

From today, the revised GST rates will come into action making a long list of daily utility items cheaper and affordable. Last week in its 23rd meeting, the GST Council approved the biggest change in the new tax regime that came into effect from July 1, 2017.

Under the current changes, 178 everyday items will get taxed at the lower rate of 18% from 28%. After this change, only 50 items will remain in the highest tax bracket of 28% which includes mainly white goods such as washing machines and refrigerators, and “sin” items such as tobacco.

Many FMCG items like condensed milk, refined sugar/sugar cubes and pasta, which were earlier taxed at 18% will come under the lower slab of 12%. Tax rates on some other items will fall from 18% to 5 percent and from 5 percent to nil.

Many companies have said that they will pass on the GST rate cut benefits to consumers but there will be a transition time before new price stocks are available in the market.

A note-worthy tax change has occurred in restaurants, the GST Council lowered the tax rate of restaurants to a uniform 5 percent from 12% on non-AC restaurants and 18% on air-conditioned ones, a move that will bring down the cost of eating out.

In this case, restaurants will not be entitled to the benefit of input tax credit (ITC). Restaurants in hotels that charge a room tariff of Rs. 7,500 or more per day will be levied the GST rate of 18% but input tax credit is allowed for them.

Goods on which the GST Council has recommended a reduction in the rate from 28% to 18% include: